Blockchain could be among Singapore’s new growth drivers: Euler HermesJanuary 31, 2018
Singapore’s GDP growth to moderate to +2.9%, economic growth to slow on lower exports but strong economic diversification and innovation efforts to keep growth in a decent range.
Mahamoud Islam, Senior Economist for Asia at Euler Hermes: “There are three types of countries in the region: The Accelerators, the Stabilizers, and the Connectors. Stabilizers and Connectors will need to focus on reducing leverage to keep growth at a healthy pace. Accelerators have some financial leeway, but reforms must follow.”
Singapore forms part of the countries that plays the role of connectors, and this group of countries are looking for new drivers of growth, said Euler Hermes in a report published today.
Singapore is one of the connector nations that would benefit from Blockchain technology.
The report said Blockchain technology can accelerate trade by cutting through paper-intensive documentation. while reducing trade finance cost.
“Trade techs could offer a new engine of growth at the crossroads between finance and trade,” said the report.
It said Singapore, South Korea, Hong Kong, Taiwan. Australia and New Zealand were the connectors in Asia.
“They have smaller and more open economies that are expected to grow at a firm pace (2% to 3%) benefiting from solid exports growth.
“They are prone to adapt policies would focus on averting financing risks stemming from high private debt and monetary tightening in advanced economies,” it said.
Euler Hermes listed three advantages for the ‘connectors’:
1. Access to financing. Provide access to financing and reduce the financing gap (USD1.5tn p.a.) to SMEs in emerging market economies (China. India). Cross-border trade finance transactions (payments e.g.) can be executed automatically via smart contracts.
2. Efficiency and Security. Digitalization of traditional trade and shipping documents can increase efficiency and security at borders (approval process).
3. Less regulatory risk. Reduction in regulatory and compliance cost for banks. Lower fraud losses for transactions that are registered on a block chain.
Singapore also has the advantage in the World Bank Doing Business Indicators, where it is ranked second overall below New Zealand.
The Connectors said Ludovic Subran, Chief Economist at Euler Hermes, are expected to grow at a firm pace of +2% to +3% on the back of solid export growth.
Policies are likely to focus on averting financing risks stemming from high private debt and monetary tightening in advanced economies.
“The economies have to work on their edge and invest in trade tech that is to say the new technologies to serve trade such as block chain.” Subran suggested.
Subran also said 2018 will be a good year for Asian businesses with an expected +4.8% GDP growth for the region. Yet trade easiness, reforms momentum, and financing conditions will be the three big-ticket items the private sector should keep in mind for 2018 and 2019.